Archives: Corporate Excise Tax

Subscribe to Corporate Excise Tax RSS Feed

REMIC Excess Inclusion Income – Is It Included in Net Income?

Corporations and financial institutions that hold REMIC residual interests may have a Massachusetts corporate excise tax refund opportunity. REMICs are essentially pools of mortgages that are taxed on a pass-through basis for federal income tax purposes. Interests in REMICs fall into two general categories: regular interests and residual interests.  Typically, the holders of the REMIC … Continue Reading

Taxpayer Challenges Department Authority to Adjust NOL Carryforward, When NOL Was Generated in Tax Years Otherwise Closed by Statute

Can a Department of Revenue auditor reduce a taxpayer’s deduction for a net operating loss (“NOL”) carryforward, even if the NOL was generated in a tax year that is closed under the statute of limitations? This question is the subject of an appeal currently pending at the ATB. The appeal involves a telecommunications company that … Continue Reading

Filing Season Reminder: Department Guidance Regarding Massachusetts Partnership and C Corporation Tax Return Filing Due Dates

Effective for tax years beginning after December 31, 2015, the due date for filing federal tax returns for C corporations and partnerships were revised.  See Public Law 114-41, the “Surface Transportation and Veterans Healthcare Choice Improvement Act of 2015”.  As shown in the table below, C Corporations now have an additional month—until April 15—to file … Continue Reading

Disallowance of Deduction for Interest Paid to Hungarian Affiliate Serves as a Reminder of Department’s Continued Audit Scrutiny of Intercompany Debt

A case recently resolved at the Appellate Tax Board serves as a reminder that Massachusetts’ auditors continue to aggressively challenge the following intercompany transactions: Interest deductions for interest paid to foreign affiliates that are not members of the unitary combined group—even if the foreign affiliate is domiciled in a country with a comprehensive tax treaty … Continue Reading

Filing Season Reminder: Revisions (and Challenges) to Alternative Apportionment Regulation

Any taxpayers considering taking an alternative apportionment position on its corporate excise tax returns this fall should remember that the Department adopted a revised alternative apportionment regulation, 830 CMR 63.42.1, which is applicable to the 2016 tax year. Under the regulation, a taxpayer must file a request for alternative apportionment when it files its tax return.  … Continue Reading

Massachusetts SJC Reaffirms Decision Sourcing 100% of Taxpayer’s Loans to Massachusetts — Confirms Opportunity for Out-of-State Financial Institutions

On Friday, August 12, the Massachusetts Supreme Judicial Court (the “SJC”) reaffirmed its decision in First Marblehead—that a financial institution that is commercially domiciled in Massachusetts can be required to source 100% of its loans to Massachusetts for purposes of computing its property factor numerator.  See The First Marblehead Corp. v. Commissioner, Supreme Judicial Court … Continue Reading

Massachusetts Net Worth “True Debt” Litigation Moves Forward—Oral Argument Held, Awaiting Decision

With oral argument and briefing complete, the Massachusetts Department of Revenue’s authority to increase the net worth component of a taxpayer’s corporate excise using its “true debt” analysis is under review by the Appeals Court in National Grid Holdings, Inc. et. al. v. Commissioner.  The appeal should be of particular interest to taxpayers because, in … Continue Reading

U.S. Supreme Court Vacates Decision in First Marblehead; Remands to Massachusetts Supreme Judicial Court

On October 13, the United States Supreme Court granted a request for review in the case of First Marblehead Corporation v. Massachusetts Commissioner of Revenue, and summarily vacated the decision issued January 28, 2015, by the Supreme Judicial Court of Massachusetts. The case has been remanded to the Supreme Judicial Court for further consideration in … Continue Reading

Massachusetts Denies ‘True Debt’ Treatment for Cash Management Obligations

The Massachusetts Appellate Tax Board (“ATB”) has once again issued a Findings of Fact and Report upholding a Department assessment on the basis that a taxpayer’s intercompany obligations under a cash management system were not bona fide debt.  The most recent decision, issued September 4, 2015, is Staples, Inc. and Staples Contract and Commercial, Inc. … Continue Reading

Report from the Boston Bar Association Annual Tax Conference

The Boston Bar Association held its annual tax conference this past Thursday, and as always the BBA pulled together a great lineup of practitioners, legislators, and Department of Revenue officials to discuss the latest in Massachusetts state tax.  The event was broken into four sections; one each on tax policy, litigation, and administrative updates, as … Continue Reading

Appellate Tax Board Case Update: MassMutual Proves Intercompany Debt is True Debt

Today, the Appellate Tax Board (“ATB”) released its Findings of Fact and Report in the related cases of Massachusetts Mutual Life Insurance Company and MassMutual Holding LLC v. Commissioner and MML Investor Services, Inc. v. Commissioner, in which the ATB held that intercompany debt between MassMutual and its affiliates was true debt. As true debt, … Continue Reading

First Marblehead Requests U.S. Supreme Court Review In SINAA Sourcing Appeal

In a case of interest for any taxpayer with substantial securitization activities, First Marblehead Corporation and Gate Holdings, Inc. have requested United State Supreme Court review of a recent determination of the Massachusetts Supreme Judicial Court (“SJC”), by way of this petition. The petition for review can be found here. The case involves the sourcing … Continue Reading

The Commissioner of Revenue’s Use of the Sham Transaction Doctrine Examined in Tax Analysts Column

In the most recent edition of “The Taxpayers’ Advocate”, a quarterly column published by Tax Analysts focusing on taxpayers’ rights in state and local tax, Michael A. Jacobs, Robert E. Weyman, Brent Beissel, and Jack Trachtenberg of Reed Smith LLP discuss the Massachusetts Commissioner of Revenue’s use of the sham transaction doctrine.  The column, titled … Continue Reading

Department of Revenue releases detailed guidance for corporate excise tax amnesty program

The Massachusetts Department of Revenue released TIR 15-2 specifying the administrative details of the amnesty program authorized by the legislature earlier this year. The amnesty period is open now through May 15, 2015, for eligible taxpayers who owe corporate excise taxes (business corporations, as well as financial institutions, and insurance companies); estate taxes; fiduciary income taxes; … Continue Reading

Massachusetts Enacts Corporate Tax Amnesty to Occur Before June 30, 2015

On Friday, Governor Charlie Baker signed legislation, which is intended to close the budget deficit for the 2015 fiscal year. The full text of the legislation (House Bill 52) is available at the following link. In addition to some spending cuts aimed to cure the budget shortfall, the bill authorizes a corporate tax amnesty program, … Continue Reading

A Quick Overview of Substantive Changes in Final Massachusetts Market Sourcing Regulation 830 CMR 63.38.1—From 10/30/14 Draft to Final

As we reported on Friday, the Massachusetts Department of Revenue has promulgated its final regulations governing the apportionment of income (830 CMR 63.38.1).  The regulations implement legislation that mandates market-based sourcing and a throwout rule for sales other than sales of tangible personal property, effective for tax years beginning on or after January 1, 2014. … Continue Reading

Massachusetts Promulgates Final Market Sourcing Regulation

This afternoon, the Massachusetts Department of Revenue promulgated its Final Regulation 830 CMR 63.38.1: Apportionment of Income, to implement the market-based sourcing rules which took effect for tax years beginning after January 1, 2014.  The final regulation can be found here: Final Market Sourcing Regulations. The Final Regulation follows a Working Draft of the same regulation which was released by … Continue Reading

Associated Industries of Massachusetts Comments on Proposed Market Sourcing Regulations

On December 4, the Associated Industries of Massachusetts (AIM) submitted written comments to the Department of Revenue regarding the Department’s proposed market sourcing regulations.  The proposed regulations govern the sourcing of receipts from sales of services and intangibles.  In its comments, AIM rightly objected to provisions that prevent taxpayers from adjusting their sourcing methods through … Continue Reading

Massachusetts Market Sourcing Update: Report from Public Hearing on Market Sourcing and Special Industry Apportionment Regulations

Today, the Department of Revenue held a hearing for the public to present comment regarding the Department’s proposed market sourcing regulation.  In addition, the proposed special industry apportionment regulations for Airline Corporations, Motor Carriers, and Courier and Package Delivery Services; and the proposed corporate nexus regulation were also addressed at today’s hearing.  The proposed regulations were … Continue Reading

ATB Finds Genentech is Subject to Massachusetts Tax; Offers Guidance on P.L. 86-272

This post is part of a series of posts discussing key issues in the Appellate Tax Board’s recent decision in Genentech, Inc. v. Commissioner.  We previously reported on this decision in our prior post. In Genentech, Inc. v. Commissioner, the Appellate Tax Board held that the Massachusetts activities of a biotechnology company were not protected … Continue Reading

ATB Upholds Single-Factor Apportionment for Manufacturer

On November 17, 2014, the Appellate Tax Board released its Findings of Fact and Report in Genentech v. Commissioner which held that a pharmaceutical company qualified as a “manufacturer” under Massachusetts law, and was required to apportion its corporate excise tax base using the single sales factor formula for manufacturing corporations, instead of the three … Continue Reading

Public Hearing on Proposed Regulations Set for December 4

The Massachusetts Department of Revenue will hold its public hearing to discuss the proposed market sourcing regulation on December 4, 2014.  In addition, the proposed special industry apportionment regulations for Airline Corporations, Motor Carriers, and Courier and Package Delivery Services; and the proposed corporate nexus regulation are also scheduled to be heard as part of the … Continue Reading

Massachusetts Releases Second Draft of Market Sourcing Regulations

This afternoon, the Massachusetts Department of Revenue released its Proposed Regulation 830 CMR 63.38.1: Apportionment of Income, to implement the market-based sourcing rules which took effect for tax years beginning after January 1, 2014.  Here is the proposed market sourcing regulation. The Proposed Regulation follows a Working Draft of the same regulation which was released by the … Continue Reading

Massachusetts Audits and Appeals Update—Transfer Pricing and Embedded Royalties

From time to time, we’ll be using this space to discuss recurring Massachusetts state tax issues were seeing at audit and on appeal.  In the first in this series, we’ll focus on transfer pricing adjustments. Over the past few years, the Department’s auditors have aggressively attacked intercompany payments between affiliated entities—especially for tax years prior … Continue Reading
LexBlog